Comcast $CMCSA announced plans Monday to separate into two publicly traded companies through a tax-free spinoff of NBCUniversal and Sky, dividing its cable and broadband operations from its media and entertainment businesses.
The split will create two independent companies — one focused on broadband and wireless, the other on media and entertainment
Cheng Xin / Getty Images
Comcast $CMCSA announced plans Monday to separate into two publicly traded companies through a tax-free spinoff of NBCUniversal and Sky, dividing its cable and broadband operations from its media and entertainment businesses.
Under the new structure, the spunoff NBCUniversal entity will bring together Sky — Comcast's European media business — with its theme parks, Peacock, Bravo, the NBC and Telemundo broadcast networks, and Universal's film and television studios. The remaining Comcast will retain its broadband, wireless, and cable services.
Comcast stock rose more than 20% in premarket trading following the announcement.
Board and regulatory approvals are required before the deal can be finalized, with Comcast targeting completion within roughly twelve months. Comcast shareholders will receive stock in both companies. Following the closing of the transaction, Comcast intends to hold onto as much as a 19.9% ownership share in the new NBCUniversal for up to a year, at which point it expects to convert that position into proceeds.
Leadership of the two companies will be divided between current co-CEO Mike Cavanagh, who takes the helm at NBCUniversal, and Michael Angelakis, a one-time Comcast CFO who will serve as a strategic adviser until the spinoff is done and then assume the CEO role at the restructured Comcast. Brian L. Roberts, who holds the titles of chairman and co-CEO, is expected to stay engaged across both organizations after the split.
"The transaction we are announcing will unlock a more entrepreneurial management approach and open up a multitude of new opportunities for each business," Roberts said in a statement.
"Both companies begin this next chapter from positions of strength," Cavanagh said in a statement. "Comcast will continue to build on its leadership in connectivity, while NBCUniversal, together with Sky, will have the scale, brands, content and financial resources to compete as a premier global media and entertainment company."
The deal builds on a restructuring move Comcast already completed, when it shed a collection of cable TV assets — CNBC and MS Now among them — by folding them into a newly created public entity, Versant Media.
Driving the decision is a deteriorating operating environment for traditional media and cable companies, as subscriber migration to streaming services continues and wireless carriers alongside fiber buildouts chip away at Comcast's broadband base, according to Reuters. Industry consolidation has accelerated around Comcast as well, with a $110 billion Warner Bros. Discovery acquisition by Paramount $PARA Skydance clearing DOJ review after the two companies had already closed their own combination, according to CNBC.
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